SoftBank Acquires Vision Fund ARM Stake At $64bn Valuation

Arm Cortex-A15

Japan’s SoftBank acquires 25 percent ARM stake from its Vision Fund unit in deal that values UK chip designer at $64bn, ahead of planned IPO

Japanese tech-focused holding company SoftBank Group has acquired the 25 percent stake in Cambridge-based chip designer ARM that it did not directly own from its Vision Fund unit in a deal that values ARM at just over $64 billion (£50bn), according to multiple reports citing unnamed sources.

The deal comes as SoftBank prepares an initial public offering (IPO) of ARM shares on New York’s Nasdaq market in September, and gives an indication of the price range SoftBank may be seeking for the firm.

More details about the IPO, expected to be the biggest this year, are expected to become available later on Monday when SoftBank makes a so-called F-1 document public, disclosing information such as ARM’s financials and operations, but not the IPO pricing or the amount the firm is planning to raise.

Details such as the target valuation are expected to be revealed in September just before a planned IPO roadshow.

SoftBank chief executive Masayoshi Son. Image credit: SoftBank
SoftBank chief executive Masayoshi Son. Image credit: SoftBank

Blockbuster offering

SoftBank is currently in talks to list ARM at a valuation of $60bn to $70bn, Reuters reported. The Vision Fund payout places the parent company under added pressure to meet such price expectations.

The Japanese company headed by Masayoshi Son bought ARM for £23.4bn in 2016 and took it private for $32bn in 2016.

It then sold a 25 percent stake to Vision Fund 1 for $8bn in 2017.

The VF1 buyout removes a complication for ARM’s IPO because the fund had planned to cash out its stake over time following the listing, while SoftBank has indicated it plans to remain a long-term investor.

Minority stake

Some reports indicated SoftBank plans to sell only about 10 percent of the company in the listing, which may raise less than the $8bn to $10bn range SoftBank was earlier planning.

The acquisition is effectively a payout to VF1’s biggest investors, Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala, which have lost money on many of the fund’s other investments such as shared workspace provider WeWork and Chinese ride-sharing firm Didi Global.

The IPO plans are seen as a test for a flotation market that has shown signs of recover after a year and a half of lacklustre activity.

SoftBank committed to the ARM offering after a proposed sale to graphics chipmaker Nvidia collapsed last year in the face of regulatory opposition.